The Religious Conversion of Corporate Social Responsibility

• Jurisdiction: United States,Federal
• Publication year: 2021
• Citation: Vol. 71 No. 2

The Religious Conversion of Corporate Social Responsibility

Elizabeth Sepper

James D. Nelson

THE RELIGIOUS CONVERSION OF CORPORATE SOCIAL RESPONSIBILITY

Elizabeth Sepper^* James D. Nelson^**

Abstract

This Article debunks the analogy often drawn between principles of corporate social responsibility (CSR) and claims for corporate religious exemption. In the wake of the Supreme Court's decision in Burwell v. Hobby Lobby Stores, Inc., which held that for-profit businesses are eligible for religious exemptions from general laws, a rising tide of scholars and advocates has argued that the two programs are symmetrical and mutually supportive.

Looking to the intellectual history of CSR, we demonstrate sharp conflicts—rather than congruence—between the analytical underpinnings of CSR and religious exemptions for corporations. Whereas CSR enlists law-abiding corporations to advance public objectives, these religious exemptions oppose state laws in the personal interest of shareholders. Our analysis uncovers a fundamental mismatch between the political and economic orders imagined by CSR and corporate religious exemptions. Corporate social responsibility posits a distinctly democratic political economy with the state leading its corporate allies in pursuit of societal goals. Proponents of corporate religious exemptions subvert this tradition: corporations defend private liberty from the threat of the public. This vision of the state and the corporation in law, politics, and the economy proves anathema to the project of corporate social responsibility.

[Page 218]

Introduction.............................................................................................218

I. The Contours of the Corporate Social Responsibility and Corporate Religious Exemption Debates.................................225

A. Shareholder Wealth Maximization and Its Discontents ........... 225
B. Linking CSR to Corporate Religious Exemption ...................... 230

II. An Obvious Incongruence...........................................................234
III. The Democratic Political Economy of CSR.............................239

A. Corporate Power as a Dilemma for Democracy...................... 239
B. Advancing Regulatory Objectives ............................................ 242
C. The Publicness of Business Corporations ................................ 247

1. From Private Property to the Public's Concern ................ 247
2. The Firm-State Analogy ..................................................... 249

IV. The Anti-Democratic Political Economy of Corporate Religious Exemption.....................................................................252

A. Democracy as a Dilemma for Institutional Autonomy ............. 252
B. Resisting Regulation ................................................................. 255
C. A Rigid Line Between the Public and the Private ..................... 258

1. The Privacy of the (Religious) Corporation ....................... 259
2. Self-Interest of Shareholders .............................................. 261

V. Retirement or Revival of Principled CSR?..............................264

A. Time for Retirement? ................................................................ 264
B. Opportunity for Revival? .......................................................... 266

Conclusion.................................................................................................271

Introduction

Imagine a corporation, let's call it FineCorp.¹ Specializing in media and live events, FineCorp has over 800 employees. Business has been good—annual revenue tops $50 million. And once construction is completed, FineCorp will run its operations out of a sparkling $90 million headquarters.

[Page 219]

FineCorp is not all about the money, though. It sees itself as a "godly company." Among its values, the firm is committed to working "as unto the Lord." This religious message has led to the recruitment of committed employees. Working at FineCorp, one employee reports, means she does "more than just make a product people don't need." Another recalls thinking, "Wow, here's a for-profit that's about Jesus." To reward its workers, FineCorp pays well above minimum wage. Employment is said to be a "ministry and a mission," which is why its founder calls FineCorp "the best place to work in America."

But not everyone shares this enthusiasm. One employee, let's call her Betty, was fired last year after she became pregnant. Betty was not married—she engaged in premarital sex in conflict with FineCorp's values. Betty sued FineCorp, claiming that it broke federal and state laws prohibiting sex discrimination. The company then asked the court for a religious exemption. Complying with the law, it says, would infringe on its free exercise of religion in violation of the First Amendment and the Religious Freedom Restoration Act.

We might disagree on whether a religious exemption should be granted. But is firing Betty the same as FineCorp's decision to pay above the minimum wage? Are both actions examples of corporate social responsibility?

A rising chorus of voices in the legal academy would say yes. Corporate social responsibility (CSR) means that businesses may advance secular values beyond profit maximization. So too should corporate religious exemptions permit businesses to pursue religious values over mere profits.² In corporate law, one faction of scholars has embraced Burwell v. Hobby Lobby Stores, Inc., a Supreme Court decision exempting for-profit businesses from federal law, as an

[Page 220]

endorsement of corporate social responsibility.³ By granting a corporate religious exemption, the Court—these scholars say—affirmatively rejected wealth maximization in favor of CSR.⁴ For their part, religious objectors and their supporters have picked up the analogy and run with it. A host of advocates, academics, and regulators have claimed that CSR advances the case for an expansive range of corporate religious exemptions.⁵

Putting these claims of congruence to the test, this Article reveals that corporate social responsibility and corporate religious exemptions prove irreconcilable. As an initial matter, corporate social responsibility involves doing more than state or federal laws require, whereas corporate religious exemptions lower the regulatory bar. This obvious contradiction, we argue, points to a deeper and more foundational divergence between the political economies of CSR and corporate religious exemptions. Corporate social responsibility looks to the democratic state to lead economic efforts, identify social values, and harness corporate power in the direction of democracy. The pursuit of corporate religious exemptions defies these core commitments. Its underlying political economy portrays the democratic state as a looming threat,

[Page 221]

corporations as bulwarks of freedom, and the public as narrow in scope. This vision of the state and the corporation in law, politics, and the economy proves antithetical to corporate social responsibility.

By exposing these underlying tensions, this Article clarifies the stakes of debates over the rights and responsibilities of businesses. Our analysis leads to the conclusion that CSR provides no support for exempting business corporations from regulation. It further reveals that CSR may be at an inflection point. If some CSR enthusiasts continue to define religious exemptions as socially responsible behavior, they risk corrupting the concept beyond recognition. If, instead, CSR proponents unite in rejecting religious exemptions, they might yet revive CSR in the context of new initiatives for corporate accountability.

Two brief notes about methodology. First, in making this argument, we draw upon the long intellectual history of CSR in legal and management scholarship.⁶ By isolating the central strands of CSR as an intellectual project, we develop a manageable standard against which to measure the coherence of arguments made in its name. We adopt a standard and widely accepted definition of the concept: corporate social responsibility requires managers to attempt to further societal, labor, or environmental goals in ways that do not advance—or may even impede—shareholder wealth maximization. Second, we aim to give a fair and charitable account of both corporate social responsibility and corporate religious exemptions. In previous work, we have opposed corporate religious exemptions on both doctrinal and normative grounds.⁷ We have also criticized corporate social responsibility, in theory and in practice.⁸ Here, we neither defend nor contest either concept. We instead evaluate how they hang together.⁹

[Page 222]

Part I begins by introducing the questions that have split corporate law scholarship for the last century: In whose interests should a corporation act? And what purposes may a corporation pursue? As we explain, for the majority of corporate law scholars, the answer is clear: corporations serve as vehicles to maximize the financial wealth of shareholders.¹⁰ A tenacious minority of corporate law scholars dissent, insisting that corporations can—and should—have broader social purposes and owe duties to stakeholders outside of shareholders.¹¹

In 2014, certain supporters of corporate social responsibility claimed a victory in this long-running debate. The Supreme Court, they said, had affirmed the principles of CSR in granting a religious exemption to a for-profit business in Burwell v. Hobby Lobby Stores, Inc.¹² A variety of commentators in corporate law and church-state law explicitly linked CSR and corporate religious exemptions.¹³

In Parts II-IV, we debunk these claims of congruence. Part II explores an evident contradiction between corporate social responsibility's commitment to legal compliance and corporate religious objectors' claims to opt out of generally applicable legal minimums.¹⁴ This inconsistency has prompted some exemption advocates to respond that...